Washington Archive

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* WASHINGTON (8/14/09)--Janet Yellen, president of the Federal Reserve Bank of San Francisco, is emerging as a candidate for the head of the Federal Reserve Board, according to financial observers. Yellen is an economist who headed the Council of Economic Advisors under Former President Bill Clinton. She also has taught economics at the University of California-Berkeley since 1980. If chosen, she would be the first woman to lead the Fed (American Banker Aug. 13). Besides Yellen, other candidates seeking to replace current Fed chief Ben Bernanke include Lawrence Summers, director of the National Economic Council and former president of Harvard University, and Alan Blinder, former Fed vice chairman. President Barack Obama has not indicated if he will nominate Bernanke again. Bernanke’s term expires in January ... * WASHINGTON (8/14/09)--The U.S. government spent more than it made in July for the 10th consecutive month (The Wall Street Journal Aug. 13). In a monthly budget statement released Wednesday, the Treasury said the government was $180 billion in debt during July. Last month’s federal government spending totaled $332 billion. The debt is attributed to costs of a rescue package for financial firms, reduced tax revenues from corporate profits, and the economic stimulus plan. The federal budget deficit was $102 billion in July 2008. Deficits of a consecutive 11 months have been recorded three times. The last time was May 1991. The widest deficit for one month is $193 billion, which was recorded in February ...

WASHINGTON (8/14/09)--The Financial Accounting Standards Board (FASB) should issue a sweeping exposure draft on fair value accounting around the end of this year, Chairman Robert Herz said at a FASB open meeting held Thursday. According to Herz, the exposure draft would address fair value accounting rules for all financial instruments, including allowances related to loan loss accounts. While Herz provided few details on the substance of the potential exposure draft, he indicated that the board would provide the industry with ample time to comment on the proposal once it has been issued. Herz said that the changes, once proposed and approved, could not be put into effect before 2011. However, the board will provide a clearer schedule for the implementation of the proposed rules by posting a project plan timeline on the FASB website sometime next week. FASB will hold a closed meeting of its trustees on Aug. 25. The Credit Union National Association will discuss fair value and other matters of concern to credit unions during a Sept. 17 conference call with Chairman Herz.

WASHINGTON (8/14/09)--No lenders regulated by the National Credit Union Administration (NCUA) have been referred to the U.S. Department of Justice (DOJ) for "being at potentially heightened risk" of violating fair lending regulations, the Government Accountability Office (GAO) has found. Lenders that are regulated by the Office of the Comptroller of the Currency (OCC) were also less likely to be referred, while the GAO reported that those that fall under the supervision of the Federal Reserve, the Office of Thrift Supervision (OTS), and the Federal Deposit Insurance Corporation (FDIC) are more likely to be referred to the DOJ. According to the report, the NCUA has made zero lender referrals since 2005. However, the OCC has made one referral, and the Fed, the OTS, and the FDIC have referred over 100 lenders. Overall, the GAO report, which was released by House Financial Services Committee Chairman Barney Frank (D-Mass.) on Thursday, called on federal agencies to increase the amount of data that is collected from lenders to facilitate compliance with fair lending laws. According to the GAO, the data should include “key underwriting data for mortgage loans” like credit scores; loan-to-value and debt-to-income ratios; information on an applicant's race, ethnicity and gender; and “relevant underwriting data for non-mortgage loans.” While the GAO admitted that altering reporting requirements could increase costs for some lenders, it recommended that legislators find ways to offset those costs. One potential option would be limiting the new requirements to larger institutions that handle larger percentages of loans, the GAO said.

WASHINGTON (8/14/09)--CU Members Mortgage has warned that recent changes to Truth in Lending disclosures that would modify disclosures for closed-end mortgage loans and home equity lines of credit (HELOCs) will “greatly affect the mortgage loan process.” These changes may “reflect negatively” on organizations that are not trained nor fully prepared for the new regulatory changes, according to the Dallas-based mortgage company. The Federal Reserve recently proposed changes to Regulation Z (Truth in Lending), including a revision that would add some fees and settlement costs to annual percentage rate calculations. Regulation Z would also require lenders to provide a list of suggested questions for borrowers to ask about a mortgage. Lenders would show borrowers how the interest rate of their loan compares with those given to other borrowers with excellent credit and would provide borrowers with information on how their payment schedule could change if they are signed on to an adjustable rate mortgage. Lenders also would need to notify borrowers of a change in their monthly payment at least 60 days in advance and would be required to provide a “final disclosure,” dictating many terms of the mortgage, within three days of closing. The Fed is currently accepting comments on this proposal, and will continue to do so until late October. The Credit Union National Association is analyzing these proposals and will post a regulatory comment call on the proposals soon. For prior coverage of the proposal, use the resource link.